It is very important to ensure that you have protection in place in the event of an unexpected death or illness which could impact your personal or business finances.
This is essential if you have a residential mortgage, as if you suffer an untimely death the mortgage can be repaid in full to be certain your family can remain in the property should they wish.
The main three needs for protection are usually to protect a mortgage, protect your family or to protect your business.
You can do this by arranging life only cover, which is cheaper and would pay out in the event of you dying within the term of the policy. A more comprehensive plan would include critical illness protection, which is more expensive, as the risk of having to claim on the policy is very high as it is estimated that 1 in 2 of us will suffer a critical illness at some point.
It is vital to secure expert and professional advice regarding this to ensure any policy is relevant to your circumstances, cost effective and the correct Trust advice is received.
Decreasing Term
and Level Term
This type of insurance is the most common to protect your mortgage debt.
Decreasing cover is cheaper and means that the sum assured will reduce annually, typically in line with your outstanding mortgage balance.
Level cover means that the sum assured stays static throughout the term of the mortgage. In the event of a claim the mortgage balance is likely to be lower than the capital sum paid providing you with a possible surplus.
Critical Illness can be added to either of the above. This type of plan would pay out upon diagnosis of a qualifying critical illness within the plan term. Providers plans and terms will vary relating to the level of conditions, benefits and advantages. With the vast amount of plans available it is imperative to seek advice from a specialist protection advisor.
Critical Illness
Critical illness cover is a type of financial protection which pays out a sum assured upon diagnosis of a critical illness. There is an extensive list of illnesses covered by the majority of providers but some providers may cover some illnesses which other providers may not. As with mortgages, there is an endless list of providers out there all offering different benefits and advantages. It is key to seek advice to know which provider and policy is right for you.
Family Protection
It is a common assumption that if your mortgage is protected and paid off in full in the event of a death that this is sufficient. What most people forget to acknowledge is that the remaining household, personal and social expenditure still needs to be financed and likely now only on one income, meaning most people’s standard of living would suffer or even result in the family home having to be sold. Family protection plans can be set up either to pay a lump sum or a regular monthly income. They provide essential security to you, relieving you of any financial worry, at a very difficult time.
Whole of Life
This is a form of financial protection that has no term end date and guarantees to pay out in the event of the death of the policy holder. It is often the most expensive form of protection as the policy provider guarantees to pay the sun assured at some point. A need for a whole of life is normally specific and in most people’s circumstances a more cost effective plan can be arranged. Typical reasons for a Whole of Life plan would be for funeral costs or inheritance tax planning.